European markets steady as traders await NFP release

Trading activity remained subdued during the European session on Wednesday, with no major economic or corporate headlines driving sentiment. Eurozone retail sales data for July pointed to softer consumer demand, as the volume of retail trade slipped by 0.6% month-on-month. That reversed the 0.2% gain seen in June. Year-on-year, however, retail activity stayed marginally positive: sales in the Eurozone edged up 0.6% compared with July 2024, while across the broader EU they rose 1.0%.

The monthly decline was mainly driven by weaker demand for non-food items, where Eurozone sales fell 1.4%. Sales of automotive fuel also dropped 0.8%. Food, drinks and tobacco offered some support, with a 0.4% increase.

Market price action remained largely rangebound in the run-up to the US nonfarm payrolls report. Equities edged higher and oil moved lower, but the shifts were minimal.

In the North American session, Canada's employment report and the US NFP data are due. Canada's employment change for August is forecast at 15,000, down from 75,000 previously, while the unemployment rate is expected to hold at 6.4%. The data is unlikely to alter the Bank of Canada's policy outlook, with attention remaining on inflation. Still, a much stronger report could give the Canadian dollar a lift after the BoC's more hawkish-than-expected rate decision.

The US NFP is forecast at 56,000, compared with -23,000 previously. The unemployment rate is expected to stay at 4.1%. Average hourly earnings are seen rising 3.0% year-on-year, versus 3.2% previously, and 0.3% month-on-month, compared with 0.1% before. The consumer price index will carry more weight since it will determine whether the Federal Reserve hikes in September or holds off for at least another month. That means market reaction to the jobs data will probably be limited if the figures come in line or slightly above/below expectations, as they would not change the Fed's stance. A very strong or very weak print would likely be needed to move markets meaningfully.